CASH SECURED PUTS Covered Calls’ Companion · to Buy Earns An option is a contract (1 contract...

CASH SECURED PUTS

Covered Calls’ Companion

DISCLAIMER: The intent of this presentation is to helpexpand your financial education. Although theinformation included may be relevant to your particularsituation, it’s not meant to be personalized advice. Whenit comes to investing, insurance, and financial planning,it’s important to speak to a professional and get advicethat is tailored to your unique, individual situation. Allinvestments involve risk including possible loss ofprincipal. Please see our Performance Discussion andOwner’s Manual; they are an important part of thisdiscussion.

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PRESENTATION SLIDES

✓ Immediate download of today’s slides

ONLINE COURSE

✓ Option Basics✓ Understanding Option Pricing✓ Managing your Emotions

COVERED CALL SCREENER

✓ Access to Snider Advisors’ free Covered Call Screener

www.SniderAdvisors.com/AllyBonus

Thanks for joining us!


Snider Advisors is a boutique, registered investment advisor, based in Dallas, Texas. Helping our clients strive to be better investors has been priority number one since we opened our

doors in September of 2002.


[email protected]

888-6-SNIDER (888-676-4337)

www.SniderAdvisors.com


A long-term strategy that uses a combination of stocks,

covered calls and cash-secured puts, and cash management

techniques in a uniquely powerful way in an effort to generate portfolio income. generate portfolio income.


An option is a contract (1 contract represents 100 shares) to buy or sell an underlying asset at a specified price (the strike price) on or before a

specified date (the expiration date).

YOUR 2-MINUTE OPTION PRIMER

CALL PUT





CALL PUT

BUY

SELL


CALL PUT

BUY Rightto Buy

Rightto Sell

SELL

BUYERS have RIGHTS

SELLERS have OBLIGATIONS








CALL PUT

BUY Rightto Buy

Rightto Sell

SELL Obligated to Sell

Obligated to Buy

BUYERS have RIGHTS



CALL PUT PREMIUM

BUY Rightto Buy

Rightto Sell Pays


Obligated to Buy Earns





BUYERS have RIGHTS


ANATOMY You SELL a put

You set aside CASH for stock purchase

You’re obligated to BUY SHARES at the strike

price on or before the expiration date

You receive OPTIONPREMIUM, which you get to keep, regardless of the

expiration outcome.


Cash Secured Put

1 Select the Stock

2 Select the Expiration Date

3 Select the Strike Price

4 Place the Trade

Example 1: Steps


5 Expiration Outcomes

EXAMPLE: STEPS

Example: Stock Selection

PORTFOLIODESIGN

BUSINESS ANALYSIS

OBJECTIVE SPECIFIC

Potential to generate income?

Is this a stock you want to own?

Will it fit in your portfolio?

EXAMPLE: STOCK SELECTION


OPTION CHAIN

Selected Strike Range:

$57.92

$45.00 to $65.00 Expiration Dates (1)

Date: September 5, 2017

EXAMPLE: EXPIRATION


Oct 2017-45 Days

Dec 15 2017-101 Days

Jan 19 2018-136 Days

Mar 16 2018- 88 Days

OPTION CHAIN

Selected Strike Range:

$57.92

$45.00 to $65.00 Expiration Dates (1)

Date: September 5, 2017

EXAMPLE: OPTION CHAIN

STRIKE PRICES

BID PRICE


OPTION CHAIN

EXAMPLE: STRIKE PRICE

Put Strike Price: 95% Value of Stock Price

$57.92 x 95% = $55.02

1 OPTION CONTRACT = 100 SHARES

$1.95 x 100 = $195


XYZCash-Secured PutSELL TO OPEN 1 contract of XYZ Oct 20 2017 55.00 PUT at the Market, Good for the day.

1.95 2.05 2.15

Commission: $5.60


EXAMPLE: PLACE THE TRADE

Sell to Open 1 October 55 Put

1.95 2.10

1.95 2.05 2.10

SELL TO OPEN

1 OPTION CONTRACT = 100 SHARES

ANATOMY Sell 1 October $55 put

Set aside $5,500 for purchase

You’re obligated to BUY 100 SHARES at $55 each

on or before October 20, 2017.

You receive $189.40 in option premium.

(1.95 x 100 - $5.60).

Cash Secured Put


Cash Secured Put

WHEN ARE YOU PAID FOR THE OPTIONS YOU SELL?When you sell them.


OUTCOME 1

Call EXERCISEDSELL 100 shares

Option Expiration is typically the third Friday

of the month.


September October

$50

$60

$65

$0

$55

$45

Stock closes ABOVEthe PUT STRIKE

PUT EXPIRES

Example: Expiration


EXAMPLE: EXPIRATION

$50

$60

$65

$0

$55

$45

Example: Expiration

Stock closes BELOW the PUT STRIKE

PUT IS EXERCISED

BUY 100 shares at $55

September October


EXAMPLE: EXPIRATION

CALL PUT PREMIUM

BUY Rightto Buy

Rightto Sell Pays


Obligated to Buy Earns





The Snider Investment Method

Put Expires

Moving Forward:Sell Cash Secured Put


MOVING FORWARD…

The Snider Investment MethodMOVING FORWARD…

Put Expires Put is Assigned

Moving Forward:Sell Cash Secured Put

Moving Forward:Sell Covered Call


A long-term strategy that uses a combination of stocks, covered calls and cash-secured puts, and cash

management techniques in a uniquely powerful way in an effort to generate portfolio

income.


Buy 100 shares of JAM at $44.55 each

Commission: $4.95

Example: Snider Method


EXAMPLE: SNIDER METHOD

BUY 100 shares of JAM at the Market, Good for the day.

EXAMPLE: SNIDER METHOD

Obligated to BUY 100 JAM shares at

$42.00 eachCASH SECURED PUT:

Sell to Open 1 October $42.50 Put

Commission: $6.25

Obligated to SELL 100 JAM shares at

$45 each

COVERED CALL: Sell to Open

1 October $45 Call

Short StrangleSELL TO OPEN 1 contract of JAM Oct 20 2017 45.00 CALL at the Market, Good for the day.

SELL TO OPEN 1 contract of JAM Oct 20 2017 42.00 PUT at the Market, Good for the day.

$42.50

$47.50

$50.00

$0

$45.00

$40.00

Stock closes ABOVEthe CALL STRIKE

• Call is Exercised• SELL 100 Shares of JAM at $45

• Put Expires

$44.55

September October


EXAMPLE: EXPIRATION

$42.50

$47.50

$50.00

$0

$45.00

$40.00

$44.55

September October


EXAMPLE: EXPIRATION

Stock closes BELOWthe PUT STRIKE

• Put is Exercised• BUY 100 Shares of JAM at $42

• Call Expires

$42.50

$47.50

$50.00

$0

$45.00

$40.00

Example: Expiration

$44.55

September October


EXAMPLE: EXPIRATION

Stock closes BETWEENthe CALL and PUT STRIKE

• Call Expires• Put Expires

The Snider Investment Method

RISKS• Limited profit •Stock Risk

BENEFITS• Cash Flow

• Stock Ownership

CASH-SECURED PUT OVERVIEW


Lo

ss /

Pro

fit

Stock Price

Stock Cash-Secured Put

Cash-Secured Put Chart


CASH-SECURED PUT OVERVIEW

DISCLAIMER: The intent of this presentation is to helpexpand your financial education. Although theinformation included may be relevant to your particularsituation, it’s not meant to be personalized advice. Whenit comes to investing, insurance, and financial planning,it’s important to speak to a professional and get advicethat is tailored to your unique, individual situation. Allinvestments involve risk including possible loss ofprincipal. Please see our Performance Discussion andOwner’s Manual; they are an important part of thisdiscussion.


PRESENTATION SLIDES

✓ Immediate download of today’s slides

ONLINE COURSE

✓ Option Basics✓ Understanding Option Pricing✓ Managing your Emotions

COVERED CALL SCREENER

✓ Access to Snider Advisors’ free Covered Call Screener


Thanks for joining us!


COMING SOON!!

SNIDER METHOD ONLINE COURSE


TUESDAY September 12th

CLIMBING THE MARKET WITHAN OPTION LADDER


CASH SECURED PUTS Covered Calls’ Companion · to Buy Earns An option is a contract (1 contract...

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